Mu' meneen Brothers and Sisters,

As Salaam Aleikum wa Rahmatullahi wa Barakatuh. (May Allah's Peace, Mercy and Blessings be upon all of you)

One of our brothers/sisters has asked this question:

Assalam alikum brother,

My brother has to pay loan a of Rs 8 lakhs, can he buy some property of Rs 10 lakhs on his name before paying back that loan?

(There may be some grammatical and spelling errors in the above statement. The forum does not change anything from questions, comments and statements received from our readers for circulation in confidentiality.)

Answer:

Pay loan or invest

In the name of Allah, We praise Him, seek His help and ask for His forgiveness. Whoever Allah guides none can misguide, and whoever He allows to fall astray, none can guide them aright. We bear witness that there is none worthy of worship but Allah Alone, and we bear witness that Muhammad (saws) is His slave-servant and the seal of His Messengers.

Dear and beloved brother in Islam, it is not the taking out of a loan which is disallowed or unlawful in Islam, but it is the taking or the giving of interest (riba) on the loan taken which is absolutely unlawful and forbidden by Allah and His Messenger (saws).

Allah says in the Holy Quran Chapter 2 Surah Baqarah verse 274-276:

But those who devour ‘riba’ become like the one whom Shaitaan has bewitched and maddened by his touch. They have been condemned to this condition because they say, “Trade is just like ‘riba”, whereas Allah has made trade halaal and ‘riba’ haraam. Henceforth, if one abstains from taking ‘riba’ after receiving this admonition from his Lord, no legal action shall be taken against him regarding the ‘riba’ he had devoured before: his case shall ultimately go to Allah. But if one repeats the same crime even after this, he shall go to Hell, where he shall abide for ever! Allah deprives ‘riba’ of all blessing and develops charity, and Allah does not like an ungrateful, sinful person.

Allah says further in the Holy Quran Chapter 2 Surah Baqarah verse 278:

O Believers!, fear Allah and give up that ‘riba’ which is still due to you, if you are true believers. But if you do not do so, then you are warned of the declaration of war against you by Allah and His Messenger!

Allah says in the Holy Quran Chapter 4 Surah Nisa verse 161:

That they took ‘riba’, although they were forbidden. And that they devoured men’s substance wrongfully. We have prepared for those among them who reject faith a grievous punishment (of Hell Fire)!

Al-Tirmidhi Hadith 2827 Narrated by Abdullah ibn Mas'ud

Allah's Messenger (saws) said, "Even though usury be much, it leads in the end to penury."

Al-Tirmidhi Hadith 2829 Narrated by Ali ibn AbuTalib

Ali said he heard Allah's Messenger (saws) invoke the curse of Allah on those who took usury, those who paid it, those who recorded it, and those who refused to give sadaqah.

Thus if one has taken an interest-based loan, then it would obviously be prudent and akin to piety and righteousness on the part of the debtor to fear Allah and repay his loan as soon as possible and save himself from indulging in the evil abomination of ‘riba’, making a solemn covenant with his Lord that never ever would he approach the abomination of ‘riba’ ever again.

Your Question: My brother has to pay loan a of Rs 8 lakhs, can he buy some property of Rs 10 lakhs on his name before paying back that loan?

Sahih Muslim Hadith 4649 Narrated by Amr ibn al-'As

The Messenger of Allah (saws) said: ‘All the sins of a ‘martyr are forgiven except debt.’

Such is the sanctity of settling one’s debt in the Sight of Allah Subhanah, that the Lord Most Merciful forgives every sin of a ‘martyr’ who gives his life in Allah’s Cause, except debt!

If one takes out a loan, and has the capacity and ability to pay off the loan, but delays or procrastinates its paying beyond its agreed period….such a person has been declared unjust and a tyrant by the Messenger of Allah (saws).

Sahih Al-Bukhari Hadith 3.487 Narrated by Abu Huraira

The Prophet (saws) said, "Procrastination (delay) in paying debts by a wealthy person is injustice.”

But if the brother has taken an (interest free) loan with the intention to invest that loaned money so that he may make some profit and pay back his loan to his creditor, although not encouraged, there is no prohibition against the taking of such interest-free loans in Shariah Law, if indeed one wills to do so.

Whatever written of Truth and benefit is only due to Allah’s Assistance and Guidance, and whatever of error is of me alone. Allah Alone Knows Best and He is the Only Source of Strength.

Your brother and well wisher in Islam,

Burhan